Verona Pharma (VRNA) 10-Q 10 May 24 2024 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2024	May 02, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-38067
Entity Registrant Name	Verona Pharma plc
Entity Incorporation, State or Country Code	X0
Entity Tax Identification Number	98-1489389
Entity Address, Address Line One	3 More London Riverside
Entity Address, City or Town	London
Entity Address, Postal Zip Code	SE1 2RE
Entity Address, Country	GB
Country Region	44
City Area Code	203
Local Phone Number	283 4200
Title of 12(b) Security	Ordinary shares, nominal value £0.05 per share*
Trading Symbol	VRNA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		648,654,174
Amendment Flag	false
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001657312

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 254,882	$ 271,772
Prepaid expenses	3,622	3,617
Tax incentive receivable	11,461	10,954
Other current assets	1,875	3,365
Total current assets	271,840	289,708
Non-current assets:
Furniture and equipment, net	22	24
Goodwill	545	545
Equity interest	15,000	15,000
Right-of-use assets	2,505	2,847
Total non-current assets	18,072	18,416
Total assets	289,912	308,124
Current liabilities:
Accounts payable	4,651	3,492
Accrued expenses	8,269	3,585
Current operating lease liabilities	1,118	1,180
Other current liabilities	736	435
Total current liabilities	14,774	8,692
Non-current liabilities:
Term loan	48,546	48,374
Non-current operating lease liabilities	1,604	1,775
Total non-current liabilities	50,150	50,149
Total liabilities	64,924	58,841
Commitments and contingencies
Shareholders' equity:
Ordinary £0.05 par value shares; 667,659,630 and 667,659,630 issued, and 647,372,062 and 643,536,094 outstanding, at March 31, 2024 and December 31, 2023, respectively	42,771	42,771
Additional paid-in capital	602,497	601,063
Ordinary shares held in treasury	(1,282)	(1,517)
Accumulated other comprehensive loss	(4,601)	(4,601)
Accumulated deficit	(414,397)	(388,433)
Total shareholders' equity	224,988	249,283
Total liabilities and shareholders' equity	$ 289,912	$ 308,124

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - £ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value (in pounds sterling per share)	£ 0.05	£ 0.05
Common stock, issued (in shares)	667,659,630	667,659,630
Common stock, outstanding (in shares)	647,372,062	643,536,094

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Operating expenses:
Research and development	$ 6,764	$ 12,610
Selling, general and administrative	20,434	9,589
Total operating expenses	27,198	22,199
Operating loss	(27,198)	(22,199)
Other income/(expense):
Research and development tax credit	585	2,313
Interest income	3,378	2,677
Interest expense	(1,586)	(293)
Foreign exchange (loss)/gain	(219)	932
Total other income/(expense), net	2,158	5,629
Loss before income taxes	(25,040)	(16,570)
Income tax expense	(754)	(173)
Net loss	$ (25,794)	$ (16,743)
Profit/(loss) per share, basic (in dollars per share)	$ (0.04)	$ (0.03)
Profit/(loss) per share, diluted (in dollars per share)	$ (0.04)	$ (0.03)
Weighted-average shares outstanding, basic (in shares)	645,701,000	621,451,000
Weighted-average shares outstanding, diluted (in shares)	645,701,000	621,451,000

Consolidated Statements of Shar

Consolidated Statements of Shareholders’ Equity - USD ($) $ in Thousands	Total	At-The-Market Sales Agreement	Ordinary shares	Ordinary shares At-The-Market Sales Agreement	Additional paid-in capital	Additional paid-in capital At-The-Market Sales Agreement	Ordinary shares held in treasury	Accumulated other comprehensive loss	Accumulated deficit
Beginning balance (in shares) at Dec. 31, 2022			631,338,246
Beginning balance at Dec. 31, 2022	$ 230,466		$ 40,526		$ 529,187		$ (1,549)	$ (4,601)	$ (333,097)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(16,743)								(16,743)
Issuance of common shares (in shares)				20,321,384
Issuance of common shares		$ 56,909		$ 1,227		$ 55,682
Restricted share units vested							270		(270)
Share options exercised	1,827				1,756		71
Share-based compensation	4,290				4,290
Ending balance (in shares) at Mar. 31, 2023			651,659,630
Ending balance at Mar. 31, 2023	$ 276,749		$ 41,753		590,915		(1,208)	(4,601)	(350,110)
Beginning balance (in shares) at Dec. 31, 2023	643,536,094		667,659,630
Beginning balance at Dec. 31, 2023	$ 249,283		$ 42,771		601,063		(1,517)	(4,601)	(388,433)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(25,794)								(25,794)
Restricted share units vested							170		(170)
Share options exercised	816				751		65
Common shares withheld for taxes on vested stock awards	(3,338)				(3,338)
Equity settled share-based compensation reclassified as cash-settled	(237)				(237)
Share-based compensation	$ 4,258				4,258
Ending balance (in shares) at Mar. 31, 2024	647,372,062		667,659,630
Ending balance at Mar. 31, 2024	$ 224,988		$ 42,771		$ 602,497		$ (1,282)	$ (4,601)	$ (414,397)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (25,794)	$ (16,743)
Adjustments to reconcile net income to net cash used in operating activities:
Foreign exchange loss/(gain)	219	(932)
Other non-cash items	82	73
Accretion of redemption premium on debt	90	18
Share-based compensation	4,258	4,290
Depreciation	263	157
Changes in operating assets and liabilities:
Prepaid expenses	(5)	938
Tax incentive receivable	(585)	(2,313)
Other current assets	942	1,362
Accounts payable	1,255	4,327
Accrued expenses	4,762	3,951
Operating lease liabilities	(152)	(165)
Income taxes	754	141
Other current liabilities	301	(886)
Net cash used in operating activities	(13,610)	(5,782)
Cash flows from investing activities:
Purchases of furniture and equipment	16	0
Net cash used in investing activities	(16)	0
Cash flows from financing activities:
Proceeds from issuance of stock	0	56,862
Proceeds from Oxford Term Loan	0	9,996
Payments of withholding taxes from share-based awards	(3,575)	0
Proceeds from exercise of share options	816	1,827
Net cash (used in)/provided by financing activities	(3,123)	68,685
Effect of exchange rate changes on cash and cash equivalents	(141)	685
Net change in cash and cash equivalents	(16,890)	63,588
Cash and cash equivalents at beginning of the period	271,772	227,827
Cash and cash equivalents at end of the period	254,882	291,415
Supplemental Cash Flow Information [Abstract]
Interest paid	933	244
Payment of debt issuance costs	$ (364)	$ 0

Organization and description of

Organization and description of business operations	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and description of business operations	Organization and description of business operations Verona Pharma plc is incorporated and domiciled in the United Kingdom. Verona Pharma plc has one wholly-owned subsidiary, Verona Pharma, Inc., a Delaware corporation (together with Verona Pharma plc, the “Company”). The address of the registered office is 1 Central Square, Cardiff, CF10 1FS, United Kingdom. The Company is a biopharmaceutical group focused on developing and commercializing innovative therapeutics for the treatment of respiratory diseases with significant unmet medical needs. The Company’s American Depositary Shares (“ADSs”) are listed on the Nasdaq Global Market (“Nasdaq”) and trade under the symbol “VRNA”. In August 2023, the U.S. Food and Drug Administration (“FDA”) accepted for review the Company’s New Drug Application (“NDA”) seeking approval of ensifentrine for the maintenance treatment of chronic obstructive pulmonary disease (“COPD”) and assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of June 26, 2024. The FDA filing stated it is not currently planning to hold an advisory committee meeting to discuss the application. The Company is preparing for a potential commercial launch in the third quarter of 2024, subject to approval of the NDA. Liquidity The Company has incurred recurring losses and negative cash flows from operations since inception, and has an accumulated deficit of $414.4 million as of March 31, 2024. The Company expects to incur additional losses and negative cash flows from operations until its products potentially gain regulatory approval and reach commercial profitability, if at all. The Company expects that its cash and cash equivalents as of March 31, 2024, will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the date of issuance. The Company’s commercial revenue, if any, will be derived from sales of products that are not expected to be commercially available until the second half of 2024, if ever. Additionally, the Company may enter into out-licensing transactions from time to time but there can be no assurance that the Company can secure such transactions in the future. Accordingly, the Company may need to obtain substantial additional funds to achieve its business objectives including to further advance clinical and regulatory activities, to fund launch related costs and to create an effective sales and marketing organization to commercialize ensifentrine, if approved. Any such funding will need to be obtained through public or private financings, debt financing, collaboration or licensing arrangements or other arrangements. However, there is no guarantee the Company will be successful in securing additional capital on acceptable terms, or at all.

Basis of presentation and summa

Basis of presentation and summary of significant accounting policies	3 Months Ended
	Mar. 31, 2024
Accounting Policies [Abstract]
Basis of presentation and summary of significant accounting policies	Basis of presentation and summary of significant accounting policies Basis of presentation and consolidation The unaudited condensed consolidated financial statements include the accounts of Verona Pharma plc and its wholly-owned subsidiary Verona Pharma, Inc. All inter-company balances and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed on February 29, 2024 (the “2023 Form 10-K”). The Consolidated Balance Sheet as of December 31, 2023, was derived from audited consolidated financial statements included in the 2023 Form 10-K but does not include all disclosures required by U.S. GAAP for complete financial statements. The Company’s significant accounting policies are described in Note 2 to those consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. The unaudited condensed consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of results of operations, comprehensive income, financial condition, cash flows and shareholders' equity for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. Segment reporting Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company has one operating and reportable segment, pharmaceutical development. Use of estimates The preparation of interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, the accrual and prepayment of research and development expenses and the fair value of share-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known, and actual results could differ from the Company’s estimates. Recently issued accounting standards not yet adopted In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The amendments in this ASU are effective for annual periods beginning on December 15, 2024, and should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. This ASU will have no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. The Company is currently evaluating the impact to its income tax disclosures. In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity's overall performance and assess potential future cash flows. The amendments in this ASU are effective for annual periods beginning on December 15, 2023 and interim periods beginning on December 15, 2024 and should be applied on a retrospective basis for all periods presented. This ASU will have no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. The Company is currently evaluating the impact to its segment disclosures.

Equity Interest

Equity Interest	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Equity interest	Equity interest The Company entered into a collaboration and license agreement (the “Nuance Agreement”) with Nuance Pharma Limited (“Nuance Pharma”) effective June 9, 2021 (the “Effective Date”), under which the Company granted Nuance Pharma the exclusive rights to develop and commercialize ensifentrine in Greater China (China, Taiwan, Hong Kong and Macau). In return, the Company received an unconditional right to consideration aggregating $40.0 million consisting of $25.0 million in cash and an equity interest, valued at $15.0 million as of the Effective Date, in Nuance Biotech, the parent company of Nuance Pharma. The equity interest is recorded at cost as the Company has elected to use the measurement alternative for equity investments without readily determinable fair values. The Company evaluates this investment for indicators of impairment quarterly. The Company did not identify events or changes in circumstances that may have a significant effect on the fair value of the investment during the three months ended March 31, 2024.

Accrued expenses

Accrued expenses	3 Months Ended
	Mar. 31, 2024
Payables and Accruals [Abstract]
Accrued expenses	Accrued expenses Accrued expenses consisted of the following (in thousands): March 31, December 31, 2024 2023 Clinical trial and other development costs $ 1,182 $ 752 Professional fees and general corporate costs 4,402 2,039 People related costs 2,685 794 Total accrued expenses $ 8,269 $ 3,585

Term loan

Term loan	3 Months Ended
	Mar. 31, 2024
Debt Disclosure [Abstract]
Term loan	Debt On December 27, 2023 (the “2023 Effective Date”), Verona Pharma, Inc. entered into a term loan facility of up to $400.0 million (the “2023 Term Loan” or “Loan Agreement”), consisting of a term loan advance in an aggregate amount of $50.0 million funded on the 2023 Effective Date (the “Term A Loan”) and four additional term loan advances subject to certain terms and conditions, as discussed below, in the amounts of $100.0 million (the “Term B Loan”), $75.0 million (the “Term C Loan”), $75.0 million (the “Term D Loan”) and $100.0 million (the “Term E Loan”). The 2023 Term Loan was entered into with Oxford Finance LLC, a Delaware limited liability company (“Oxford”), as collateral agent, and certain funds managed by Oxford and Hercules Capital, Inc. party thereto (collectively, the “Lenders”). The net proceeds of the 2023 Term Loan will be used for general corporate and working capital purposes. Each advance under the Loan Agreement accrues interest at a floating per annum rate (the “Basic Rate”) equal to (a) the greater of (i) the 1-Month CME Term SOFR (as defined in the Loan Agreement) reference rate on the last business day of the month that immediately precedes the month in which the interest will accrue and (ii) 5.34%, plus (b) 5.85%; provided, however, that (i) in no event shall the Basic Rate (x) for the Term A Loan be less than 11.19% and (y) for each other advance be less than the Basic Rate on the business day immediately prior to the funding date of such advance, (ii) the Basic Rate for the Term A Loan for the period from the 2023 Effective Date through and including December 31, 2023 was 11.19% and (iii) the Basic Rate for each advance shall not increase by more than 2.00% above the applicable Basic Rate as of the funding date of each such advance. For the three months ended March 31, 2024 the effective interest rate was approximately 13% per annum. There was no material difference be tween the carrying value and the estimated fair value of th e 2023 Term Loan outstanding.

Share based compensation

Share based compensation	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Share based compensation	Share-based compensation The following table shows the allocation of share-based compensation between research and development and selling, general and administrative costs (in thousands): Three months ended March 31, 2024 2023 Research and development $ 1,016 $ 1,103 Selling, general and administrative 3,242 3,187 Total $ 4,258 $ 4,290 The following tables show the activity of each type of share-based compensation and are presented in ordinary shares. The Company’s ADSs that are listed on Nasdaq each represent eight ordinary shares. Share options activity Number of share options outstanding Balance as of December 31, 2023 24,689,624 Granted 2,432,000 Forfeited (64,000) Exercised (1,037,424) Balance as of March 31, 2024 26,020,200 Restricted stock units (“RSU”) activity Number of RSUs outstanding Balance as of December 31, 2023 19,502,624 Forfeited (1,752) Vested (4,357,208) Balance as of March 31, 2024 15,143,664 Performance restricted stock units (“PRSU”) activity Number of PRSUs outstanding Balance as of December 31, 2023 10,730,144 Forfeited (5,248) Balance as of March 31, 2024 10,724,896

Capitalization and net loss per

Capitalization and net loss per share	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Capitalization and net loss per share	et loss per share Net loss per share is calculated on an ordinary share basis. The Company’s ADSs that are listed on Nasdaq each represent eight ordinary shares. The following table shows the computation of basic and diluted net loss per share for the three months ended March 31, 2024 and 2023 (in thousands except per share amounts): Three months ended March 31, 2024 2023 Numerator: Net loss $ (25,794) $ (16,743) Denominator: Weighted-average shares outstanding - basic and diluted 645,701 621,451 Net loss per share - basic and diluted $ (0.04) $ (0.03) During the three months ended March 31, 2024 and 2023, outstanding share options, RSUs and PRSUs over 51.9 million and 49.5 million ordinary shares, respectively, were not included in the computation of diluted earnings per ordinary share, because to do so would be antidilutive.

Subsequent events

Subsequent events	3 Months Ended
	Mar. 31, 2024
Subsequent Events [Abstract]
Subsequent events	Subsequent events Credit Agreement and Guaranty On May 9, 2024 (the “2024 Effective Date”), Verona Pharma, Inc. (the “Borrower”) entered into a term loan facility of up to $400.0 million (the “2024 Term Loan”), consisting of a term loan advance in an aggregate amount of $55.0 million funded on the 2024 Effective Date (the “Tranche A Term Loan”), a term loan advance to be borrowed within three business days after the occurrence of certain terms and conditions in an aggregate amount of $70.0 million (the “Tranche B Term Loan”), a term loan advance available subject to certain terms and conditions in an aggregate amount of $75.0 million (the “Tranche C Term Loan”), a term loan advance available subject to certain terms and conditions in an aggregate amount of $100.0 million (the “Tranche D Term Loan”) and a term loan advance available in the sole discretion of the lenders and subject to certain terms and conditions in an aggregate amount of up to $100.0 million (the “Tranche E Term Loan”), with Oaktree Fund Administration, LLC, a Delaware limited liability company, as administrative agent (in such capacity, the “Agent”), and certain funds managed by each of Oaktree Capital Management, L.P. (“Oaktree”) and OCM Life Sciences Portfolio LP (“OMERS”) party thereto (collectively, the “2024 Lenders”). The proceeds of the 2024 Term Loan will be used for general corporate and working capital purposes, and a portion of the proceeds of the Tranche A Term Loan was used by the Borrower on the 2024 Effective Date to repay in full the existing outstanding indebtedness owed under the 2023 Term Loan. The 2024 Term Loan is governed by a credit agreement and guarantee, dated as of the 2024 Effective Date, by and among the Borrower, the Company, the Agent and the 2024 Lenders (the “Credit Agreement”). The Tranche B Term Loan will, subject to customary terms and conditions, be borrowed by the Borrower within eight business days after the date the Borrower receives approval from the FDA of its NDA for ensifentrine; provided such approval is received prior to September 30, 2024. The Tranche C Term Loan will be available, subject to customary terms and conditions (including the prior borrowing of the Tranche A Term Loan and the Tranche B Term Loan), during the period commencing on the first Business Day following the date the Agent receives certification of the Company’s achievement of a specified net sales milestone and ending on December 31, 2025. The Tranche D Term Loan will be available, subject to customary terms and conditions (including the prior borrowing of the Tranche A Term Loan, the Tranche B Term Loan and the Tranche C Term Loan), during the period commencing on the first business day following the date the Agent receives certification of the Company’s achievement of a specified net sales milestone and ending on June 30, 2026. The Tranche E Term Loan will be available at the 2024 Lenders’ sole and absolute discretion. The 2024 Term Loan will mature on May 9, 2029. Each advance under the Credit Agreement accrues interest at a per annum rate equal to 11.00%. The 2024 Term Loan provides for interest-only payments on a quarterly basis until maturity. Upon repayment (whether at maturity, upon acceleration or by prepayment or otherwise), the Borrower shall pay an exit fee to the 2024 Lenders in the amount of 2.50% of the aggregate principal amount of the 2024 Term Loans to be paid (the “Exit Fee”). The Borrower may prepay the 2024 Term Loan in full or in part provided that the Borrower (i) provides at least two (2) business days’ prior written notice to the Agent, (ii) pays on the date of such prepayment (A) all outstanding principal to be prepaid plus accrued and unpaid interest, (B) a prepayment fee of 7.00% of the 2024 Term Loans so prepaid if paid on or before the first anniversary of the 2024 Effective Date; 5.00% of the 2024 Term Loans so prepaid if paid after the first anniversary of the 2024 Effective Date and on or before the second anniversary of the 2024 Effective Date; 2.00% of the 2024 Term Loans so prepaid if paid after the second anniversary of the 2024 Effective Date and on or before the third anniversary of the 2024 Effective Date or 1.00% of the 2024 Term Loans so prepaid if paid after the third anniversary of the 2024 Effective Date and on or before the fourth anniversary of the 2024 Effective Date, (C) the Exit Fee and (D) all other sums, if any, that shall become due and payable under the Credit Agreement, including interest at the default rate with respect to any past due amounts. Amounts outstanding during an event of default are due upon the Majority Lenders’ (as defined in the Credit Agreement) demand (except during a payment or bankruptcy event of default, whereupon such default interest is automatically imposed) and shall accrue interest at an additional rate of 2.00% per annum, which interest shall be payable on demand in cash and (iii) any partial prepayment of the 2024 Term Loans shall be an aggregate amount at least equal to $5.0 million in a denomination that is a whole number multiple of $1.0 million in excess thereof. The 2024 Term Loan is secured by a lien on substantially all of the assets of the Borrower and the Company, including intellectual property, subject to customary exclusions and exceptions. The Credit Agreement contains customary representations and warranties, covenants and events of default, including two financial covenants: (i) commencing on the 2024 Effective Date, the Borrower is required to maintain certain levels of cash, and, after the Account Control Agreement Completion Date (as defined in the Credit Agreement) subject to control agreements in favor of the Agent, and (ii) commencing on the fiscal quarter of Company ending on September 30, 2025, the Borrower and the Company are required to maintain quarterly trailing twelve-month net sales from the sale of ensifentrine in the United States; provided that such revenue covenant will be waived at any time (x) the Borrower and the Company’s unrestricted cash balance subject to control agreements in favor of the Agent on the last business day of the applicable fiscal quarter is equal to or greater than the product of 1.25 multiplied by the aggregate principal amount of outstanding 2024 Term Loans on such date or (y) the average daily closing price of the Company’s American Depositary Shares for each of the thirty (30) trading days preceding the last trading day of such fiscal quarter multiplied by the total number of issued and outstanding American Depositary Shares of the Company is at least $1.0 billion. The Credit Agreement also contains other customary provisions, such as expense reimbursement, as well as indemnification rights for the benefit of the Agent and the 2024 Lenders. In connection with the entry into the Credit Agreement, on the 2024 Effective Date, the Borrowers repaid in full all outstanding indebtedness and terminated all commitments under the 2023 Term Loan. The Borrower and the Company did not incur any penalties, but did incur a prepayment fee and a final payment fee, as a result of the foregoing. Revenue Interest Purchase and Sale Agreement On May 9, 2024, the Company and Verona Pharma, Inc. (collectively the “Sellers”) entered into a revenue interest purchase and sale agreement (the “RIPSA”) with Oaktree Fund Administration, LLC, a Delaware limited liability company, as administrative agent and certain funds managed by each of Oaktree and OMERS (collectively, the “Purchasers”). Under the terms of the RIPSA, in exchange for each of the Purchaser’s payment to the Sellers of a purchase price of $100 million, in the aggregate, upon approval of ensifentrine by the FDA by a specified date and subject to certain labeling conditions (the “Tranche A Purchase Price”), the Sellers agreed to a true sale of assigned interests to the Purchasers, including a right for the Purchasers to receive 6.50% on the global net sales of ensifentrine by the Sellers (the “Royalty Interest Payments”) and 5% on certain proceeds the Sellers receive from licensees engaged during the term of the RIPSA outside of the U.S. (the “Ex-U.S. Payments”). The Sellers would begin payment of the Royalty Interest Payments and Ex-U.S. Payments in the first fiscal quarter after receipt of the Tranche A Purchase Price. The Sellers will also have a right to receive an additional funding tranche equal to $150 million (the “Tranche B Purchase Price”) upon achievement of a specified net sales milestone in any trailing six-month period after receipt of the Tranche A Purchase Price and subject to certain terms and conditions. The Royalty Interest Payments and Ex-U.S. Payments will cease upon reaching a multiple of 1.75 times the amounts actually funded by the Purchasers. The RIPSA includes a buy-out option, which provides us with the right to settle all outstanding liabilities at any time by paying a buy-out amount under various terms and conditions. The Purchasers have the right to terminate the RIPSA under certain conditions, including the Company’s insolvency, and the Company’s divestment of ensifentrine, in which case we must pay the Purchasers up to 1.75 times the amounts actually funded by the Purchasers as of such default determination date. Pursuant to a security agreement signed in connection with the RIPSA, the Sellers granted to the Purchasers a security interest in certain assets to secure obligations under the RIPSA.

Pay vs Performance Disclosure

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net loss	$ (25,794)	$ (16,743)

Insider Trading Arrangements

Insider Trading Arrangements	3 Months Ended
	Mar. 31, 2024 shares
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	From time to time, our officers (as defined in Rule 16a-1(f)) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading plans (as each such term is defined in Item 408 of Regulation S-K). The trading plans are intended to satisfy the affirmative defense in Rule 10b5-1(c). During the first quarter of 2024 our officers and directors took the following actions with respect to 10b5-1 trading plans: Name and Title Action Date End Date Aggregate Number of ADS to be Sold Pursuant to Trading Arrangement David Zaccardelli, President and Chief Executive Officer Adopt March 8, 2024 February 28, 2025 900,000 Mark Hahn, Chief Financial Officer Adopt March 6, 2024 February 28, 2025 900,000 David Zaccardelli, President and Chief Executive Officer Terminate March 6, 2024 N/A 700,000 Mark Hahn, Chief Financial Officer Terminate March 5, 2024 N/A 700,000
Non-Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Terminated	false
David Zaccardelli [Member]
Trading Arrangements, by Individual
Arrangement Duration	357 days
Mark Hahn [Member]
Trading Arrangements, by Individual
Arrangement Duration	359 days
David Zaccardelli March 8, 2024 Plan [Member] | David Zaccardelli [Member]
Trading Arrangements, by Individual
Name	David Zaccardelli
Title	President and Chief Executive Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	March 8, 2024
Aggregate Available	900,000
Mark Hahn March 6, 2024 Plan [Member] | Mark Hahn [Member]
Trading Arrangements, by Individual
Name	Mark Hahn
Title	Chief Financial Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	March 6, 2024
Aggregate Available	900,000
David Zaccardelli March 6, 2024 Plan [Member] | David Zaccardelli [Member]
Trading Arrangements, by Individual
Name	David Zaccardelli
Title	President and Chief Executive Officer
Rule 10b5-1 Arrangement Terminated	true
Termination Date	March 6, 2024
Aggregate Available	700,000
Mark Hahn March 5, 2024 Plan [Member] | Mark Hahn [Member]
Trading Arrangements, by Individual
Name	Mark Hahn
Title	Chief Financial Officer
Rule 10b5-1 Arrangement Terminated	true
Termination Date	March 5, 2024
Aggregate Available	700,000

Basis of presentation and sum_2

Basis of presentation and summary of significant accounting policies (Policies)	3 Months Ended
	Mar. 31, 2024
Accounting Policies [Abstract]
Basis of presentation and consolidation	Basis of presentation and consolidation The unaudited condensed consolidated financial statements include the accounts of Verona Pharma plc and its wholly-owned subsidiary Verona Pharma, Inc. All inter-company balances and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed on February 29, 2024 (the “2023 Form 10-K”). The Consolidated Balance Sheet as of December 31, 2023, was derived from audited consolidated financial statements included in the 2023 Form 10-K but does not include all disclosures required by U.S. GAAP for complete financial statements. The Company’s significant accounting policies are described in Note 2 to those consolidated financial statements.
Segment Reporting	Segment reporting Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company has one operating and reportable segment, pharmaceutical development.
Use of estimates	Use of estimates The preparation of interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, the accrual and prepayment of research and development expenses and the fair value of share-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known, and actual results could differ from the Company’s estimates. Recently issued accounting standards not yet adopted In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The amendments in this ASU are effective for annual periods beginning on December 15, 2024, and should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. This ASU will have no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. The Company is currently evaluating the impact to its income tax disclosures. In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity's overall performance and assess potential future cash flows. The amendments in this ASU are effective for annual periods beginning on December 15, 2023 and interim periods beginning on December 15, 2024 and should be applied on a retrospective basis for all periods presented. This ASU will have no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. The Company is currently evaluating the impact to its segment disclosures.
Recently adopted accounting standards and recent accounting standards not yet adopted	Recently issued accounting standards not yet adopted In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The amendments in this ASU are effective for annual periods beginning on December 15, 2024, and should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. This ASU will have no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. The Company is currently evaluating the impact to its income tax disclosures. In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity's overall performance and assess potential future cash flows. The amendments in this ASU are effective for annual periods beginning on December 15, 2023 and interim periods beginning on December 15, 2024 and should be applied on a retrospective basis for all periods presented. This ASU will have no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. The Company is currently evaluating the impact to its segment disclosures.

Accrued expenses (Tables)

Accrued expenses (Tables)	3 Months Ended
	Mar. 31, 2024
Payables and Accruals [Abstract]
Schedule of Accrued Expenses	Accrued expenses consisted of the following (in thousands): March 31, December 31, 2024 2023 Clinical trial and other development costs $ 1,182 $ 752 Professional fees and general corporate costs 4,402 2,039 People related costs 2,685 794 Total accrued expenses $ 8,269 $ 3,585

Share based compensation (Table

Share based compensation (Tables)	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Allocation of Share Based Compensation Expense	The following table shows the allocation of share-based compensation between research and development and selling, general and administrative costs (in thousands): Three months ended March 31, 2024 2023 Research and development $ 1,016 $ 1,103 Selling, general and administrative 3,242 3,187 Total $ 4,258 $ 4,290
Share Option Activity	Number of share options outstanding Balance as of December 31, 2023 24,689,624 Granted 2,432,000 Forfeited (64,000) Exercised (1,037,424) Balance as of March 31, 2024 26,020,200
Restricted Stock Unit Activity	Number of RSUs outstanding Balance as of December 31, 2023 19,502,624 Forfeited (1,752) Vested (4,357,208) Balance as of March 31, 2024 15,143,664 Number of PRSUs outstanding Balance as of December 31, 2023 10,730,144 Forfeited (5,248) Balance as of March 31, 2024 10,724,896

Capitalization and net loss p_2

Capitalization and net loss per share (Tables)	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Computation of Basic and Diluted Earning Per Share	The following table shows the computation of basic and diluted net loss per share for the three months ended March 31, 2024 and 2023 (in thousands except per share amounts): Three months ended March 31, 2024 2023 Numerator: Net loss $ (25,794) $ (16,743) Denominator: Weighted-average shares outstanding - basic and diluted 645,701 621,451 Net loss per share - basic and diluted $ (0.04) $ (0.03)

Organization, Consolidation and

Organization, Consolidation and Presentation of Financial Statements (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) subsidiary	Dec. 31, 2023 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of wholly owned subsidiaries | subsidiary	1
Accumulated deficit | $	$ (414,397)	$ (388,433)

Basis of presentation and sum_3

Basis of presentation and summary of significant accounting policies (Details)	3 Months Ended
	Mar. 31, 2024 segment
Accounting Policies [Abstract]
Number of operating segments	1
Number of reportable segments	1

Equity Interest (Details)

Equity Interest (Details) - Nuance (Shanghai) Pharma Co Ltd $ in Millions	Jun. 09, 2021 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Transaction price	$ 40
Accounts receivable	25
Equity interest receivable	$ 15

Accrued expenses (Details)

Accrued expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Clinical trial and other development costs	$ 1,182	$ 752
Professional fees and general corporate costs	4,402	2,039
People related costs	2,685	794
Total accrued expenses	$ 8,269	$ 3,585

Term loan (Details)

Term loan (Details) - USD ($) $ in Thousands		3 Months Ended
	Dec. 27, 2023	Mar. 31, 2024	Mar. 31, 2023
Line of Credit Facility [Line Items]
Funded advances		$ 0	$ 9,996
2023 Term Loan | Secured Debt
Line of Credit Facility [Line Items]
Debt instrument, face amount	$ 400,000
2023 Term A Loan | Secured Debt
Line of Credit Facility [Line Items]
Funded advances	$ 50,000
Line of Credit | 2023 Term Loan
Line of Credit Facility [Line Items]
Effective interest rate		13%
Line of Credit | 2023 Term Loan | Base Rate
Line of Credit Facility [Line Items]
Debt instrument interest rate increase	2%
Line of Credit | 2023 Term A Loan | Base Rate
Line of Credit Facility [Line Items]
Debt instrument interest rate increase	11.19%
Line of Credit | 2023 Term A Loan | Debt Instrument Interest Rate, Period One | Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	5.85%
Line of Credit | 2023 Term A Loan | Debt Instrument Interest Rate, Period One | Minimum | Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	5.34%
Line of Credit | 2023 Term B
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 100,000
Line of Credit | 2023 Term C
Line of Credit Facility [Line Items]
Maximum borrowing capacity	75,000
Line of Credit | 2023 Term D
Line of Credit Facility [Line Items]
Maximum borrowing capacity	75,000
Line of Credit | 2023 Term E Loan
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 100,000

Share based compensation - Shar

Share based compensation - Share-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	$ 4,258	$ 4,290
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	1,016	1,103
Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	$ 3,242	$ 3,187

Share based compensation - Sh_2

Share based compensation - Share Option Activity (Details)	3 Months Ended
	Mar. 31, 2024 shares
Number of share options outstanding
Beginning balance outstanding	24,689,624
Granted	2,432,000
Forfeited	(64,000)
Exercised (in shares)	(1,037,424)
Ending balance outstanding	26,020,200

Share based compensation - RSU

Share based compensation - RSU Activity (Details)	3 Months Ended
	Mar. 31, 2024 shares
Restricted Stock Units
RSU Activity
Outstanding, beginning balance	19,502,624
Forfeited	(1,752)
Vested	(4,357,208)
Outstanding, ending balance	15,143,664
Performance restricted stock units (PRSUs)
RSU Activity
Outstanding, beginning balance	10,730,144
Forfeited	(5,248)
Outstanding, ending balance	10,724,896

Capitalization and net loss p_3

Capitalization and net loss per share - Computation (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) $ / shares shares	Mar. 31, 2023 USD ($) $ / shares shares
Earnings Per Share [Abstract]
Number of ordinary shares per ADS	8
Numerator:
Net loss | $	$ (25,794)	$ (16,743)
Denominator:
Weighted-average shares outstanding, basic (in shares)	645,701,000	621,451,000
Weighted-average shares outstanding, diluted (in shares)	645,701,000	621,451,000
Net loss per share, basic (in dollars per share) | $ / shares	$ (0.04)	$ (0.03)
Net loss per share, diluted (in dollars per share) | $ / shares	$ (0.04)	$ (0.03)
Antidilutive securities excluded from computation of loss per share (in shares)	51,900,000	49,500,000

Subsequent events (Details)

Subsequent events (Details) - USD ($) $ in Thousands		3 Months Ended
	May 09, 2024	Mar. 31, 2024	Mar. 31, 2023
Subsequent Event [Line Items]
Funded advances		$ 0	$ 9,996
Subsequent Event | Oaktree Fund Administration, LLC
Subsequent Event [Line Items]
Purchase price	$ 100,000
Percentage of global net sales	6.50%
Licensees	5%
Additional funding	$ 150,000
Multiple	1.75
2024 Term Loan | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Exit fee percentage	2.50%
2024 Term Loan | Subsequent Event | Line of Credit | Debt Instrument Interest Rate, Period One | Base Rate
Subsequent Event [Line Items]
Basis spread on variable rate	11%
2024 Term Loan | Subsequent Event | Minimum | Line of Credit
Subsequent Event [Line Items]
Minimum american depository shares value	$ 1,000,000
2024 Term Loan | Secured Debt | Subsequent Event
Subsequent Event [Line Items]
Debt instrument, face amount	$ 400,000
Debt default stated percentage	2%
Prepayment cost	$ 5,000
Denomination multiple	$ 1,000
Multiple of aggregate principle amount	1.25
2024 Term Loan | Secured Debt | Subsequent Event | Debt Prepayment Period One
Subsequent Event [Line Items]
Early repayment penalty	7%
2024 Term Loan | Secured Debt | Subsequent Event | Debt Prepayment Period Two
Subsequent Event [Line Items]
Early repayment penalty	5%
2024 Term Loan | Secured Debt | Subsequent Event | Debt Prepayment Period Three
Subsequent Event [Line Items]
Early repayment penalty	2%
2024 Term Loan | Secured Debt | Subsequent Event | Debt Prepayment Period Four
Subsequent Event [Line Items]
Early repayment penalty	1%
2024 Term A Loan | Secured Debt | Subsequent Event
Subsequent Event [Line Items]
Funded advances	$ 55,000
2024 Term B | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Maximum borrowing capacity	70,000
2024 Term C | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Maximum borrowing capacity	75,000
2024 Term D | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Maximum borrowing capacity	100,000
2024 Term E Loan | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 100,000